What Happens If You Are Unfairly Dismissed?
Employees with at least two years' continuous service have the right not to be unfairly dismissed. If your employer dismisses you without fair reason or a fair procedure, you may be entitled to compensation.
Quick Answer
If you have been employed for at least two years and believe your dismissal was unfair, you can bring a claim to an Employment Tribunal. Compensation can include a basic award (calculated like redundancy pay) and a compensatory award for financial loss, with a current cap of around £115,000 on the latter. You must act within three months of your dismissal date.
Full Explanation
The right not to be unfairly dismissed is one of the most important employment rights in England and Wales, governed by the Employment Rights Act 1996 (ERA). To qualify, an employee must ordinarily have at least two years' continuous employment with their employer (exceptions apply for automatically unfair dismissal, such as dismissal for whistleblowing or pregnancy).
For a dismissal to be fair, the employer must show: (1) a potentially fair reason for dismissal — one of the five recognised reasons being capability, conduct, redundancy, statutory illegality, or 'some other substantial reason' (SOSR); and (2) that they acted reasonably in all the circumstances in treating that reason as sufficient to dismiss. The reasonableness test considers whether the employer followed a fair procedure, including the ACAS Code of Practice on Disciplinary and Grievance Procedures.
If the tribunal finds the dismissal was unfair, it may order reinstatement or re-engagement (both rare in practice) or, more commonly, award compensation. The compensatory award covers actual financial loss — loss of earnings, loss of benefits, and future loss — subject to a statutory cap (£115,115 for dismissals on or after 6 April 2025). The basic award is calculated using a formula based on age, length of service, and weekly pay (subject to a weekly pay cap, currently £643). An uplift of up to 25% can be applied where an employer failed to follow the ACAS Code.
Before bringing a tribunal claim, you must notify ACAS of your intended claim and participate in Early Conciliation. This is a free service that gives both parties the opportunity to settle without a tribunal hearing. The limitation period for unfair dismissal claims is three months less one day from the effective date of termination — this deadline is strictly enforced and the tribunal will only extend it in exceptional circumstances.
Employees dismissed for certain reasons have automatic protection from day one of employment, regardless of length of service: pregnancy, maternity leave, assertion of a statutory right, whistleblowing, trade union activities, and part-time or fixed-term worker status.
Legal Basis
- §Employment Rights Act 1996, Part X (unfair dismissal)
- §ACAS Code of Practice on Disciplinary and Grievance Procedures 2015
- §Employment Tribunals Act 1996
- §Employment Relations Act 1999
What To Do
Obtain Your Termination Letter and Payslips
Ask your employer for a written statement of the reasons for your dismissal (you are entitled to this by law if you have been employed for two years or more). Gather all payslips, your employment contract, any disciplinary correspondence, and your P45.
Consider an Internal Appeal
Most employers have a right of appeal against dismissal. Exercising this right is important: it gives you a further chance to present your case, and failure to appeal may reduce any tribunal award. File your appeal within the timeframe set out in your employer's procedure.
Notify ACAS and Start Early Conciliation
Before you can issue a tribunal claim, you must notify ACAS. The Early Conciliation period pauses the limitation period. A conciliator will contact both sides and attempt to reach a settlement (often in the form of a COT3 agreement or a settlement agreement).
Issue a Tribunal Claim
If conciliation fails, issue your claim using Form ET1 via the Employment Tribunal online service. Complete the form carefully, setting out the dates of employment, the reasons for dismissal, and why you believe it was unfair. File within three months less one day of dismissal.
Prepare Your Case
Once the claim is issued, the respondent (your employer) will file a Response (Form ET3). A preliminary hearing and final hearing will be listed. Prepare a chronology of events, a bundle of documents, and witness statements. Consider whether you need legal representation.
Important Deadlines
Important Warnings
The three months less one day deadline is very strictly applied — missing it can bar your claim entirely. Do not delay in seeking advice.
A settlement agreement ('compromise agreement') offered by your employer will require you to waive your tribunal rights — always take independent legal advice before signing one.
Be aware that tribunal proceedings are public and will appear on public records — this may be a consideration in sensitive cases.